Midtown office market diverges in the first quarter: CBRE

From top: CBRE’s John Maher and Paul Myers (chart source: CBRE).

The market for office space in several dozen of Midtown’s top
buildings tightened over the last quarter while it got softer in the rest
of the market, commercial brokers from CB Richard Ellis said.

Paul Myers, a CBRE executive vice president, said tenants should
keep in mind the difference between buildings in the market as they
hunt for space.

“If you are a tenant… when you are looking at a top floor in a top
building and you think it is a 12 percent [availability rate] and a
tenant’s market, you are actually not correct,” Myers said.

In the first three months of the year, the availability rate for space
in 35 top buildings selected by CBRE dropped sharply, from about
9 percent to 7.3 percent, CBRE’s first-quarter report shows. But at
the same time, the rate of space available for leasing in the rest of
the Midtown market ticked up by about .4 points, to 13.4 percent,
the company reported. And for the Midtown market overall, the
availability rate also rose, up by 0.1 points to 12.3 percent.

Myers, along with John Maher, an executive vice president, and
Matthew Van Buren, an executive managing director, spoke today at
the firm’s quarterly market briefing for reporters at its Midtown office.

The difference in availability rates is critical for landlords looking to
price their space and tenants shopping for new locations.

In fact, landlords in eight buildings located on Park, Madison, Fifth
and Sixth avenues among the top 35, raised their asking rents in the
first quarter between 13 percent and 41 percent. The largest bump
was in An Unnamed Building On Park Avenue that lifted the asking
rent from $92 per foot to $130 per foot, a 41 percent bump. (The Real
Deal reported earlier this month that landlords were raising asking
rents in Midtown.)

Despite the market bifurcation, the CBRE brokers were not aware
of landlords cutting rents to attract tenants to the segments of the
market that were lagging, as they were doing aggressively in 2009
and into 2010.